BATON ROUGE (July 2, 2010) - Initial analysis of BP claims data by the state's third party claims consultant indicates significant gaps in BP's claims performance, especially when it comes to keeping up with incoming claims and issuing checks to claimants. The data also shows that an increase in the number and amounts of payments increased directly following pressure from the state to speed up payments.

Cannon Cochran Management Services, Inc. (CCMSI), which the state hired last week to implement a comprehensive review of BP's oil spill claims process, evaluated the oil company's June claims data, which covers all impacted states. BP did not provide state-specific data for many vital areas of evaluation, including number of claims and number of payments issued.

Analysis of the overall database provided by BP indicates that the total number of reported claims rose steadily in June, increasing from 30,000 to more than 85,000 total claims reported, a 170 percent increase. By the end of the month, the number of claims reported outpaced the number of payment checks issued each day. By June 30, new claims were being reported at a rate nearly 2.5 times the rate that checks were issued to claimants. However, BP added only 441 additional claims adjusters to handle the increased number of claims, bringing the total claims adjusters to 951. This is an increase of just 87 percent that is half of the increase in claims seen during the same period of time.

"The state believes that claims processing will be detrimentally impacted unless BP increases its number of claims adjusters," said Department of Children and Family Services Secretary Kristy Nichols, who is overseeing the state's response to BP's claims process. "BP must immediately address its apparent inability to keep up with daily incoming claims and pay claimants in a timely manner."

Additionally, the data indicates that the number of categories included in each claim are sharply increasing, going from almost one category per claim in the beginning of June to more than 1.25 categories per claim. Nichols said this indicates an increase in complexities of claims that are filed, which makes it even more critical that there are sufficient adjusters and resources in place to process the claims.

BP issued the most claims checks in the middle of June, the most being approximately 2,500 checks paid on June 21. That increase came within a week of additional pressure placed on BP by the state regarding its claims process. However, the number of checks issued decreased significantly just five days after the spike, with BP issuing fewer than 500 checks on June 26.

In addition, the data shows that BP paid on average around $2 million per day in claims until June 15, the same day BP provided the state data showing claimants paid for large loss claims over $5,000. On the 15th, the average increased sharply, spiking at around $11 million on June 16th. After that spike, the amount has consistently decreased, averaging less than $2 million each day during the last week in June.

"The head of BP Claims, Daryl Willis, has said several times in the press that the transition of the BP claims process to the independent commission set up by the federal government wouldn't affect the speed of payments, but we are seeing just the opposite," said Nichols. "The analysis by our third party consultant clearly shows a significant drop in payments at the end of the month, when the transition was put into place. The state needs BP to stand up to its word and put these claims payments into the hands of Louisianians who are struggling because of the oil spill."

The report also shows that average cost per claim steadily increased during June. The average during the first half of the month was around $1,200 per claim, but rose to between $1,500 and $1,600 per claim by the end of June.

"The state continues to be concerned about the growing need in the communities impacted by the oil spill and BP's slow response in the claims process," said Nichols. "For many individuals and families, claims checks may be the only income they receive during this disaster, and prompt payments are vital."

The report also raises cause for concern over its analysis of categories of claims.

The report shows that the majority of claims are for individual Loss of Income; more than 60,000 claims are classified as individual Loss of Income. However, CCMSI questions how BP is classifying claims and recommends that BP review its classification process immediately to insure that claims are properly categorized.

The report also analyzed the average cost by category, which looks at the total amount paid in each category compared to the total number of claims in that category. The data indicated that the average cost by category for Loss of Income, Property Damage and Commercial Property Damage is around $1,500 per claim. Additionally, individual property damage cost averages around $500 per claim and no payments have been made on bodily injury claims as of the end of June.

"The average cost for Loss of Income, Property and Commercial Damage claims is extremely low and indicates that many claimants had not received any payments by the end of June," said Nichols. "This is extremely distressing; families and businesses are depending on those payments to keep roofs overhead and food on tables.

The report did indicate a few promising trends. The total amount paid increased from around $40 million at the start of the June to more than $130 million by the end of the month, a significant increase. However, the state has no way of knowing how that figure compares to amounts being requested by claimants. Additionally, the average amount paid per check increased steadily over the month.

The report also included some state-specific analysis of claims, primarily showing the greatest number of claims and payments are from Louisiana. When counting all claims by category (a claim can have more than one claim per category),

Louisiana also has more than 20,000 checks paid at the end of June, double the amount any other state. That totals $71 million in payments, two-thirds more than any other state. However, the average amount per check is just $3,500, only slightly higher than other states, indicating just how wide-spread the impact of the oil spill is in Louisiana.

"Louisiana has already suffered from this disaster more than any other Gulf Coast state," said Nichols. "The data in this report continues to show inefficacy of BP's claims process to ease the suffering of Louisiana's residents."